According to Decision-Tree Analysis, Investment Projects Should Be Discontinued When

question 86

Multiple Choice

According to decision-tree analysis, investment projects should be discontinued when:

• A)the probability of success is less than 50 percent.
• B)NPV is calculated to be negative.
• C)DOL increases from previous levels.
• D)the possibility of a failing outcome exists.

---

Definitions:

Accounting Profit

The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.

Entrepreneur's Talent

Entrepreneur's talent refers to the unique skills, insights, and abilities that an entrepreneur applies to develop innovative ideas, overcome obstacles, and drive business success.

Annual Revenue

The total amount of money generated by a company from its activities, such as sales or services, before any expenses are subtracted, in one fiscal year.

Explicit Cost

The monetary payment made by a firm to an outsider to obtain a resource.